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Edifice Complex
Yale closes in on purchase of College-Chapel district buildings
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Business New Haven
7/13/1998
By: BNH
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Within 60 days, the fate of more than a dozen prime downtown properties owned by real-estate development guru Joel Schiavone and the FDIC may finally be decided.
If so, many signature properties in the College-Chapel retail district Schiavone created, seemingly out of whole cloth, in the 1980s may wind up in the hands of his alma mater, Yale University.
According to Yale's vice president and director of New Haven and state affairs, Bruce Alexander, and Schiavone Management Corp. president Craig Schiavone, final negotiations should be concluded within 45 days and the entire deal consummated within 60 days.
“We certainly hope we're in the final stages,” Craig Schiavone said, “because everyone is excited to see it conclude.”
Schiavone Management still manages all the properties, and its continued management role is a factor in the negotiations, according to Craig Schiavone.
The exact properties to be included in the deal are still under discussion. However, Schiavone Realty & Development Corp. will still own four of some 18 properties originally purchased by the corporation once the dust settles.
Joel Schiavone, once known to many as “Mr. New Haven” for his unwavering devotion to revitalizing downtown with his first property acquisition in 1979, made headlines throughout the 1980s and early 1990s for his restoration efforts.
Within ten years - and with the help of principal financier First Constitution Bank - Schiavone had purchased all the stores on Chapel Street between College and High streets. With a mortgage through Mutual of New York, he renovated the historic Taft building and also created a revitalized entertainment district in the heart of the city.
Problems developed when First Constitution collapsed in 1992, the same year Mutual of New York foreclosed on the Taft building mortgage. First Constitution held the $12.5 million mortgage Schiavone Realty & Development Corp. had on the downtown properties Schiavone had purchased during real estate's high-flying, high-priced 1980s.
All of First Constitution's holdings, including Schiavone's mortgage, were taken over by the FDIC, which went to court to seek permission to foreclose on the $12.5 million mortgage and resell the properties individually.
Thus began years of dispute.
Schiavone always maintained that the reason the revitalization of the area was so successful was because all the properties were linked together and managed as a single entity. To sell them individually, he argued, would be a recipe for disaster.
Now, after months of negotiations, that dispute may be resolved with the Yale purchase.
Another issue in the negotiations is the back taxes owed the city on the properties, and who will pay them.
Yale University already owns more than 500 residential housing units in the city and nearly 100,000 square feet of retail/commercial space in 25 buildings in the Broadway District.
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